How WFNJ Clients Are Faring Under Welfare Reform: An Early Look

Transcription

1 A Report Series of the Work First New Jersey Evaluation Work First New Jersey Evaluation How WFNJ Clients Are Faring Under Welfare Reform: An Early Look October 21, 1999 Anu Rangarajan Robert G. Wood Submitted to: Submitted by: State of New Jersey Mathematica Policy Research, Inc. Department of Human Services P.O. Box 2393 Office of Policy and Planning Princeton, New Jersey South Warren Street (609) Trenton, New Jersey Project Director: Project Officer: Stuart Kerachsky Rachel Hickson Contract No.: A87041 MPR Reference No.:

2 This report was prepared for the New Jersey Department of Human Services, under Contract No. A Any opinions expressed in this report are those of the authors and do not necessarily represent the views of the New Jersey Department of Human Services.

3 ACKNOWLEDGMENTS Many people contributed in significant ways to the preparation of this report. First and foremost, we are grateful to staff at the Division of Family Development (DFD) of the New Jersey Department of Human Services (NJDHS) for providing us with the data to draw our sample for the evaluation and to track their welfare receipt over time. In particular, we would like to thank Rudy Myers and Beth Connolly for making available the data from the Family Assistance Management Information System, for their generosity with their time, and for patiently answering the many questions we have had since the beginning of the evaluation. At the New Jersey Department of Labor (NJDOL), we would like to thank Robert Baldwin and Christopher Reimel for making available the New Jersey Unemployment Insurance data and for their continued support of the evaluation. We would also like to thank NJDHS staff for their input on the Client Study. In particular, Rachel Hickson, the project officer for this study, and Leonard Feldman have provided guidance throughout the study, have carefully reviewed versions of the survey instrument, as well as earlier drafts of reports, and have provided many useful comments. We also want to thank Barbara DeGraaf, Gerald Gioglio, Rudy Myers, and Jacqueline Tencza for their comments on the report. We also are grateful to the members of the External Advisory Group for the evaluation: Shakira Abdul- Ali of CA Associates; Ramaa Albilal of the United Way of Essex and West Hudson; Sharon Dutra of the Monmouth County Division of Employment and Training; Edward Freeland at the Woodrow Wilson School at Princeton University; Mildred A. Gaupp of the Somerset Board of Social Services; Ted Goertzel at Rutgers University; Karen Holmes of the New Jersey State Employment and Training Commission; Gwendolyn Long from the City of Trenton; Katherine Kraft from the Robert Wood Johnson Foundation; Melville D. Miller, Jr. and Alice Liu of the Legal Services of New Jersey; Ingrid Reed from the Eagleton Institute of Politics at Rutgers University; and Jeannette Russo of the Association for Children of New Jersey for generously donating their time and providing useful comments on this study. We would also like to acknowledge the cooperation of other NJDHS and NJDOL staff and their continued support of the evaluation. In addition to staff already mentioned, Kathy Krepcio (the former director of the Office of Policy and Planning); David Heins, Gene Martorony, and Mary Lucas of NJDHS; and JoAnn Hammill, Vivien Shapiro, and Henry Plotkin of NJDOL were instrumental in shaping the design of the evaluation and have been helpful during the information assembly process. We would also like to thank Sander Kelman in the Division of Medical Assistance and Health Services for his help with Medicaid data. At Mathematica Policy Research, Stuart Kerachsky, the director of the WFNJ evaluation, has guided work on this study since its beginning and provided invaluable guidance in shaping this report. Alan Hershey and Walter Corson also reviewed an earlier draft of the report and provided helpful comments. Other Mathematica staff played an important role in the completion of this report. Todd Ensor expertly directed the survey that forms the basis of the findings presented in this report. Dexter Chu, Jane Dokko, Carol Razafindrakoto, and Jonah Rockoff expertly provided skillful programming support and analyzed the survey and program administrative data. Patricia Ciaccio carefully edited the report, and Jennifer Baskwell and Jill Miller provided exemplary production support. We gratefully acknowledge these many contributions and accept sole responsibility for any errors or omissions in the report. iii

4 CONTENTS Executive Summary... xiii I Introduction...1 A. Overview of the Report...1 B. Welfare Reform in New Jersey...3 C. The Sample for This Report...4 D. Data Sources for This Report...5 E. Methodological Approach...5 F. The WFNJ Evaluation and Related Research...6 II WFNJ Clients Early TANF and Employment Experiences...7 A. What Are Clients Initial Characteristics?...7 B. What Are WFNJ Clients Initial Patterns of Welfare Receipt?...9 C. What Are WFNJ Clients Initial Employment Experiences?...13 D. How Many WFNJ Clients Have Left Welfare for Work?...15 III The Quality of Life of WFNJ Clients...21 A. What Are the Income and Poverty Levels of WFNJ Clients?...21 B. What Is the Health Status of WFNJ Clients and Their Families?...28 C. What Are the Housing Situations of WFNJ Clients?...31 D. How Are WFNJ Clients Doing on Other Measures of Life Quality?...33 E. How Common Are Serious Hardships Among WFNJ Clients?...35 IV Clients Knowledge of and Experiences with WFNJ...39 A. How Well Do Clients Understand WFNJ Provisions?...39 B. What Services Do Clients Receive, and How Do They View Them?...43 C. How Satisfied Are Clients with the Welfare Office and Staff?...44 V Challenges to Sustained Employment...47 A. Why Are Some WFNJ Clients Not Working?...47 B. What Challenges Do Employed WFNJ Clients Face?...49 C. What Child Care Challenges Do WFNJ Clients Face?...53 D. What Transportation Challenges Do WFNJ Clients Face?...58 VI Conclusions...61 A. Policy Recommendations Suggested by These Early Findings...61 B. Next Steps in the WFNJ Client Study...63 References...65 Appendix A: Supplemental Tables...67 v

5 LIST OF TABLES I.1 MAXIMUM TANF AND FOOD STAMP BENEFITS, BY FAMILY SIZE...3 II.1 II.2 III.1 CHARACTERISTICS OF WFNJ CLIENTS AT TIME OF PROGRAM ENTRY...8 WAGES AND HOURS WORKED AMONG EMPLOYED WFNJ CLIENTS...15 AVERAGE MONTHLY INCOME AND INCOME SOURCES AMONG WFNJ CLIENTS...22 V.1 CHARACTERISTICS OF JOBS HELD BY WFNJ CLIENTS, BY EMPLOYMENT STATUS AT TIME OF THE SURVEY...51 vii

6 LIST OF FIGURES II.1 II.2 II.3 II.4 II.5 II.6 II.7 II.8 II.9 PERCENTAGE RECEIVING TANF, BY MONTH AFTER WFNJ ENTRY...9 NUMBER OF MONTHS OF TANF RECEIPT DURING FIRST YEAR AFTER WFNJ ENTRY... PERCENTAGE RECEIVING FOOD STAMPS, BY MONTH AFTER WFNJ ENTRY...11 TANF AND FOOD STAMP PARTICIPATION STATUS AMONG WFNJ CASES...12 MONTHLY EMPLOYMENT RATES DURING THE FIRST YEAR AFTER WFNJ ENTRY...14 PERCENTAGE OF TIME EMPLOYED DURING THE FIRST YEAR AFTER WFNJ ENTRY...14 EMPLOYMENT AND TANF RECEIPT AMONG WFNJ CASES, BY MONTH AFTER WFNJ ENTRY...17 EDUCATION AND EMPLOYMENT HISTORY OF WFNJ CLIENTS, BY EMPLOYMENT AND TANF STATUS...18 LIVING SITUATIONS AND EMPLOYMENT STATUS OF CLIENTS WHO WERE OFF TANF AND NOT EMPLOYED AT THE TIME OF THE SURVEY...19 III.1 ANNUAL FAMILY INCOME AMONG WFNJ CLIENTS...23 III.2 III.3 III.4 FAMILY INCOME RELATIVE TO THE FEDERAL POVERTY LEVEL...23 MONTHLY INCOME FROM EARNINGS, FOOD STAMPS, AND TANF, BY MONTH AFTER WFNJ ENTRY...25 TOTAL MONTHLY INCOME, BY TANF AND EMPLOYMENT STATUS...26 III.5 POVERTY LEVELS, BY TANF AND EMPLOYMENT STATUS...26 ix

7 LIST OF FIGURES (continued) III.6 INCOME OF WFNJ CLIENTS WHO WERE OFF TANF AND NOT EMPLOYED, BY LIVING SITUATIONS AND EMPLOYMENT STATUS...27 III.7 HEALTH PROBLEMS AMONG WFNJ CLIENTS...29 III.8 HEALTH INSURANCE COVERAGE AMONG WFNJ CLIENTS...30 III.9 HOUSING PROBLEMS AMONG WFNJ CLIENTS...32 III. SCHOOL PERFORMANCE PROBLEMS AMONG THE CHILDREN OF WFNJ CLIENTS...34 III.11 OTHER PROBLEMS FACING WFNJ CLIENTS...35 III.12 III.13 SERIOUS HARDSHIPS DURING THE PAST YEAR AMONG WFNJ CLIENTS...36 SERIOUS HARDSHIPS DURING THE PAST YEAR, BY EMPLOYMENT AND TANF STATUS...38 IV.1 KNOWLEDGE OF BASIC WFNJ PROVISIONS...40 IV.2 IV.3 IV.4 KNOWLEDGE OF FIVE-YEAR TANF TIME LIMIT AMONG WFNJ CLIENTS...41 KNOWLEDGE OF TWO-YEAR WORK REQUIREMENT AMONG WFNJ CLIENTS...42 PERCEIVED EFFECTS OF TANF TIME LIMITS AND WORK REQUIREMENTS AMONG WFNJ CLIENTS...42 IV.5 SERVICES RECEIVED BY WFNJ CLIENTS...43 IV.6 IV.7 PERCEIVED USEFULNESS OF WORK-RELATED WFNJ SERVICES AMONG WFNJ CLIENTS...44 SATISFACTION WITH THE WELFARE OFFICE AND STAFF AMONG WFNJ CLIENTS...45 x

8 LIST OF FIGURES (continued) V.1 MAIN REASON FOR NOT WORKING AMONG NONEMPLOYED WFNJ CLIENTS...48 V.2 EMPLOYMENT EXPERIENCES OF WFNJ CLIENTS WHO HAVE HELD JOBS SINCE PROGRAM ENTRY...49 V.3 SHIFT WORKED BY WFNJ CLIENTS IN THEIR CURRENT OR MOST RECENT JOB...52 V.4 WORK PROBLEMS AMONG EMPLOYED WFNJ CLIENTS...54 V.5 CHILD CARE ARRANGEMENTS FOR CHILDREN UNDER AGE 6 AMONG EMPLOYED WFNJ CLIENTS...55 V.6 WEEKLY OUT-OF-POCKET CHILD CARE COSTS AMONG EMPLOYED WFNJ CLIENTS...56 V.7 RECEIPT OF GOVERNMENT CHILD CARE SUBSIDIES AMONG EMPLOYED WFNJ CLIENTS...57 V.8 COMMUTING METHODS USED BY EMPLOYED WFNJ CLIENTS...58 xi

9 EXECUTIVE SUMMARY n 1997, New Jersey implemented its new welfare initiative, Work First New Jersey (WFNJ), Iwhich includes five-year time limits on cash assistance, immediate work requirements for most clients, and expanded support services. To learn how clients are faring under the new reforms, the New Jersey Department of Human Services (NJDHS) has contracted with Mathematica Policy Research, Inc. (MPR) to conduct a comprehensive five-year evaluation of the initiative. This is the first in a series of six reports that will track the progress of current and former WFNJ clients over time. It focuses on four key issues: (1) clients welfare and employment experiences after they enter WFNJ; (2) their quality of life as measured by income, health, housing arrangements, and other outcomes; (3) their understanding of basic WFNJ provisions, and (4) the potential challenges they face to obtaining and sustaining employment. KEY QUESTIONS AND FINDINGS: IN BRIEF What are clients welfare and employment experiences? Welfare receipt fell steadily over time among WFNJ clients, and employment increased steadily. Approximately a year and a half after entering WFNJ, more than one in three clients were off welfare and working, just under one in three remained on TANF and were not working, and about one in four were neither receiving TANF nor working. What is the overall life quality of clients and their families? About a year and a half after WFNJ entry, a third were no longer in poverty. Clients who were off TANF and working were considerably better off financially than those who remained on TANF and were less likely to have experienced recent hardships, such as a serious illness or a severe housing crisis. However, many did not receive available post-tanf supports, such as food stamps and Transitional Child Care benefits. About half of clients who left TANF and were not working had either recent earnings of their own or a household member with current earnings. The rest (about 12 percent of all WFNJ clients) had neither source of support and were at high risk of extreme poverty. Do clients understand the basic provisions of WFNJ? Most clients know that benefits are time limited and that recipients must eventually work to continue to receive them. They are less clear, however, on specifics, such as how long people can receive cash benefits and when the work requirement starts. What are clients biggest challenges to finding and keeping jobs? Unemployed clients who remain on TANF face a variety of barriers to employment. In general, they have low skills and less prior work experience than other clients. Many report serious health problems--4 in indicated they had been seriously ill in the past year, and 1 in 4 said they could not work at all because of their health. xiii

10 WELFARE REFORM IN NEW JERSEY In August 1996, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), which abolished the Aid to Families with Dependent Children (AFDC) entitlement program. The Temporary Assistance for Needy Families (TANF) program was established, which imposes a five-year lifetime limit on cash assistance and requires welfare recipients to participate in work-related activities within two years. New Jersey has implemented the federal welfare legislation as part of WFNJ. WFNJ includes the five-year time limit on cash benefits established under PRWORA and requires most clients to participate in a work activity as soon as they enroll in the program. Under WFNJ, the state also has expanded child care assistance and other services designed to ease welfare recipients transition to the workforce. During the first two years under these reforms and in the context of a strong economy, New Jersey has experienced an unprecedented reduction in its welfare caseload. Between July 1997 (when WFNJ was fully implemented) and August 1999, the size of the welfare caseload declined by almost 40 percent. These changes have led to a great deal of interest in learning how families receiving cash assistance in New Jersey are faring and what has happened to those who have left cash assistance. In response to this interest, and to help the state and counties improve program operations, NJDHS has contracted with MPR and its subcontractors, the Roper Group and Mathtech, Inc., to conduct an evaluation of WFNJ designed to provide frequent feedback both to state policymakers and to program operators. The evaluation includes three components: (1) a longitudinal Client Study to track the progress of TANF families over five years, (2) a Program Study to examine implementation issues, and (3) a Community Study to understand how WFNJ is affecting the broader community and unfolding at the local level. RESEARCH METHODS To establish what happens to WFNJ clients before and after they leave welfare, the Client Study is tracking, over a five-year period, a sample of WFNJ families who participated in the program during its first 18 months of operations. Six rounds of longitudinal surveys will be conducted with a statewide sample of up to 2,000 WFNJ clients at 9- to 12-month intervals. Findings from the client surveys will be enhanced by information from state administrative data for a sample of,000 clients and qualitative data from three rounds of in-depth, in-person interviews with 60 WFNJ clients. This current report relies primarily on data from the first of the six client surveys. The Client Study examines clients who have remained on cash assistance, as well as those who have left TANF. Therefore, it is broader than the recent TANF leaver studies conducted in several states, which focus only on those who have left cash assistance. In addition, because the Client Study tracks clients over a longer period and uses data from a variety of sources, it should provide a more complete picture of the status of current and former welfare recipients. The first round of client surveys began in March 1999; by September 1999, MPR completed interviews with 1,621 of these clients (an 81 percent response rate). This report is based on data from the 1,423 survey respondents who were enrolled in WFNJ from July xiv

11 MATHEMATICA S EVALUATION: THREE INTERRELATED STUDIES # The Client Study is tracking a statewide sample of WFNJ families over a fiveyear period to establish what happens to them before and after they leave welfare. Focusing on clients who participated in WFNJ during its first 18 months of operation, this study is documenting the welfare receipt, employment levels, income, health, housing arrangements, and other indicators of WFNJ clients general well-being and quality of life. It also will identify factors affecting individuals success in moving from welfare to work and document changes in the welfare caseload over time. The study uses three main types of data: (1) six rounds of longitudinal surveys with a statewide sample of up to 2,000 WFNJ clients, conducted at 9- to 12-month intervals; (2) information from state administrative data systems on a larger sample of,000 WFNJ clients, documenting such outcomes as their welfare receipt, employment levels, and earnings; and (3) three rounds of in-depth, in-person interviews with a subset of 60 WFNJ clients, designed to gather more detailed, qualitative information about their lives. # The Program Study is examining operational challenges and promising strategies for overcoming them, to help state and county staff identify and address key implementation issues. It also will help the state develop performance indicators to guide program improvement efforts. The analysis draws on state administrative data and three rounds of site visits to 11 of the state s 21 counties. Site visitors will interview a variety of county staff members, conduct case file reviews, and observe key program activities. # The Community Study is conducting case studies in three urban areas--newark, Camden, and the population centers of Cumberland County--to understand how WFNJ is affecting the broader community and unfolding at the local level. The case studies will focus on the extent to which public and private institutions are collaborating to address low-income parents employment barriers and employers labor force needs. The study s primary goal is to identify promising strategies to enable local institutions to better respond to welfare reform and the needs of lowincome families. The analysis will draw on a survey of low-income residents, an employer survey, state administrative data, and interviews with local service providers and other stakeholders through June 1998, the first year of program operations. Interviews were conducted an 1 average of 21 months after clients entered the program. The survey asked about clients backgrounds, employment histories, income sources, potential employment barriers, and experiences and perceptions of WFNJ. We also use state administrative data on monthly TANF and food stamp benefits. 1 Because clients in our research sample who entered WFNJ between July and December 1998 had a short follow-up period at the time of the first survey (about eight months, on average), we excluded these 198 clients (1,621! 1,423) from this first report. This later cohort of WFNJ clients will be included in future Client Study reports. xv

12 KEY FINDINGS Several key findings have emerged from our early look at clients experiences since entering the program. # WFNJ clients are diverse. At the time they entered the program, some faced significant barriers to self-sufficiency; others were less disadvantaged and faced fewer obstacles. Although more than half of WFNJ clients had a high school diploma or a general equivalency diploma (GED) when they entered the program, a significant fraction (44 percent) did not. Many (55 percent) had worked in the two years before they entered WFNJ; however, almost half had no labor market experience during this period (Table 1). More than 1 in spoke a language other than English at home. When they entered the program, clients had two children under age 18, on average, and 40 percent had a child under age 3. The average age of their youngest child was just under five years. Most (78 percent) lived in single-parent households with no other adult present. # TANF receipt fell steadily over time among WFNJ clients, and employment increased steadily. About a year and a half after program entry, average monthly income of clients was about $1,0; a third were no longer in poverty. At the time of the first client survey (approximately a year and a half after program entry), 6 of clients had exited TANF and just under half (44 percent) were working. As a group, WFNJ clients had monthly incomes of about $1,0, on average. Those who left TABLE 1 CHARACTERISTICS OF WFNJ CLIENTS AT TIME OF PROGRAM ENTRY Female 96 Average Age (in Years) 30.4 Has High School Diploma or GED 56 Employed in Two-Year Period Prior to WFNJ Entry 55 Race/Ethnicity African American 53 Hispanic 26 White Other 1 Does Not Speak English at Home 13 Average Number of Children Under Age 18 in Household 2.0 Age of Youngest Child Younger than 3 years 40 3 to 5 years 26 6 years or older 34 Sample Size 1,423 Percentage SOURCE: WFNJ administrative records data and first WFNJ Client Survey. xvi

13 welfare for work had considerably higher incomes; their income was about twice as high as the income of those on TANF and not working. Among all clients, just over one-third had current incomes higher than the federal poverty level (computed on a monthly basis), while almost twothirds remained in poverty. Some clients, especially those remaining on TANF and those not working, faced health and housing problems and other hardships. Among all clients, one in four had been seriously ill in the previous year. One in reported that they could not work at all because of their health. About half reported having a housing problem in the previous year, most often living in overcrowded conditions or doubling up with friends or relatives to save on rent. Fourteen percent had experienced a serious housing crisis, such as being evicted, living in a shelter, or being homeless. # Many WFNJ clients have left welfare for work. More than one in three were off TANF and working about a year and a half after entering WFNJ. These clients are making a good start and are considerably better off financially than those who remained on TANF. Many, however, do not receive available supports, such as food stamps, Transitional Child Care, or Medicaid benefits. At the time of the first client survey, 35 percent of clients who participated in WFNJ during its first year were working and no longer receiving TANF (Figure 1). These clients are faring better financially than those who remained on TANF. Their average incomes were almost $1,600 a month, and most of them (71 percent) had current monthly incomes above FIGURE 1 EMPLOYMENT AND TANF STATUS OF WFNJ CLIENTS AT TIME OF THE FIRST SURVEY Not Working, No Longer on TANF 27% 35% Working, No Longer on TANF 29% 9% Not Working, Still on TANF Working, Still on TANF Source: First WFNJ Client Survey. Note: Figures refer to the TANF and employment status approximately 21 months after WFNJ entry of clients who entered the program from July 1997 to June xvii

14 2 the federal poverty level. In contrast, clients who were on TANF and not employed had monthly incomes of about $800 a month, and only percent had current monthly incomes above the federal poverty level (Figure 2). Furthermore, clients who had left TANF for work also were less likely than those who remained on TANF to have experienced serious hardships in the past year, such as a serious illness, a severe housing crisis, or being the victim of a violent crime. Although they are faring relatively well financially, many of these clients do not take advantage of the supports available to them when they leave cash assistance. For example, only one of three clients who had left TANF was receiving food stamps. Similarly, among employed clients who were off TANF and had young children, fewer than one in four were receiving Transitional Child Care benefits. WFNJ clients who were working and had left TANF were also less likely to have health insurance than were those who remained on TANF (77 versus 98 percent), indicating that some clients leaving welfare for work are not taking advantage of transitional Medicaid benefits. It is important to understand why many clients who are leaving TANF are not using these benefits. On follow-up surveys, nearly three in four former WFNJ clients who were not receiving these benefits said that they were aware of the availability of such benefits. Therefore, lack of knowledge only partially explains FIGURE 2 DIFFERENCES BETWEEN WFNJ CLIENTS WHO HAVE LEFT WELFARE FOR WORK AND THOSE WHO HAVE REMAINED ON TANF 0 Percentage Characteristics at Program Entry 90 Characteristics at Time of Survey Had High School Diploma or GED Worked During Two Years Prior to Entry Monthly Income Below Poverty Level Seriously Ill in Past Year Housing Crisis in Past Year a On TANF, Not Working Off TANF, Working Source: State administrative records data and first WFNJ Client Survey. a "Housing crisis" is defined as being evicted, living in a shelter, or being homeless. 2 Converting their monthly incomes to an annual figure by multiplying by 12 yields an annual income of about $19,000 for this group, which is 43 percent of the median family income in New Jersey. The $19,000 figure may somewhat overstate the actual incomes these clients will receive over the next year, however, because some clients may not work the full 12 months. We will examine how long clients stay employed in our next report. xviii

15 these low participation rates. Future rounds of the WFNJ client survey (conducted as part of this five-year evaluation) will further explore why many WFNJ clients who are leaving TANF do not use these benefits. # Some clients have not yet made a successful welfare-to-work transition. Three in remained on TANF and were not working about a year and a half after entering WFNJ. These clients face a variety of barriers to employment, including low education levels, little labor market experience, and poor health. Clients who remained on TANF and were not working had low average incomes, and most had incomes below the federal poverty level (Figure 2). As a group, these clients are considerably less prepared for employment than those who left welfare for work. For example, only about half of those remaining on TANF and not working had graduated from high school or earned a GED; fewer than half had worked during the two years before they entered WFNJ. In contrast, twothirds of those who were working and no longer receiving TANF had high school diplomas or GEDs; a similar fraction had recent work experience when they entered the program. In addition, many WFNJ clients who were not working and remained on TANF reported serious health problems. Four in indicated they had been seriously ill in the past year (compared with only 15 percent of those working and off TANF). One in four said they could not work at all because of their health. # About one in four clients was neither working nor receiving TANF at the time of the survey. Some of these clients had other sources of financial support, such as earnings from a spouse or partner. Others did not and were at high risk of poverty. Clients who have exited TANF and are not working are of particular concern for policymakers, because they may be at high risk of extreme poverty. Previous TANF leaver studies of clients who have left cash assistance in other states have focused primarily on their employment levels and rates of welfare recidivism. These prior studies shed little light on how clients who leave welfare and are not employed support themselves. As part of this report, we examine the 27 percent of our sample who fall into this group (off TANF and not working) in more detail. We find that about one in five of them lives with an employed spouse or partner (Figure 3). This fraction is faring relatively well financially, with average monthly incomes of more than $1,500 (similar to the incomes of clients who have left welfare for work). Another 18 percent were employed within the past three months but had recently lost their job. This group was faring less well, with average monthly incomes of about $650. Some of these clients may find other employment fairly soon; others may return to TANF. An additional 15 percent of those off TANF and not employed were living in households with employed adults other than spouses or partners. These clients, who were relying on the financial help of friends and relatives to support themselves, had little income of their own (averaging just over $0 in the prior month). The remaining individuals--nearly half of those off TANF and not employed (about 12 percent of all clients who participated in WFNJ during its first year)--had no recent employment history, nor did they live with other employed adults (Figure 3). These clients relied largely on food stamps, child support payments, and supplemental security income xix

16 FIGURE 3 LIVING SITUATIONS AND EMPLOYMENT STATUS OF CLIENTS WHO WERE OFF TANF AND NOT EMPLOYED AT THE TIME OF THE SURVEY Lives with Employed Spouse/Partner 21% 45% No Recent Employment, Does Not Live with Other Employed Adults Held a Job in Past Three Months, Does Not Live with Employed Spouse/Partner Source: First WFNJ Client Survey. 18% 15% No Recent Employment, Does Not Live with Employed Spouse/Partner, but Lives with Other Employed Adults 3 (SSI) to support themselves. As a group, they had very low current income (about $400 during the prior month, on average), and almost all (96 percent) were living in poverty. Although these individuals may be some of the most disadvantaged WFNJ clients, many have no contact with the welfare system. To ensure that these clients receive appropriate support services, it is important to understand why they exited TANF and how they are managing to make ends meet. Future reports as part of the WFNJ Client Study will focus on these issues in more detail. # Most clients are aware of the basic WFNJ provisions, such as time limits, work requirements, and the availability of transitional benefits. They are less clear, however, on the specifics. More than 80 percent of clients know that TANF benefits are time limited and that recipients must eventually work to continue to receive benefits. Some confusion remains about the specifics of these provisions, however. For example, only about half of all clients are aware that TANF recipients can receive cash benefits for five years. About one in four thinks the limit is less than five years. Similarly, although most clients (86 percent) know about the TANF work requirements, few know when it takes effect. Nonetheless, in spite of some confusion over specific rules, program staff appear to have succeeded in conveying 3 One in five of these clients was receiving SSI at the time of the survey. Moving from time-limited TANF to SSI (which has no time limit on benefits) is most likely a good outcome for clients with serious health problems. xx

17 the basic message to clients that cash benefits are time limited and that clients will have to participate in some work-related activity to continue to receive cash benefits. IMPLICATIONS FOR POLICY AND FUTURE RESEARCH This report provides an early look at how current and former WFNJ clients and their families are faring under the new welfare policies, focusing on clients welfare and employment experiences and general life quality. Because our findings are based on the first of a series of six client surveys, they should be viewed as a benchmark by which to track client progress over time. Subsequent rounds of the survey will give a clearer picture of clients progress in moving off welfare and provide more in-depth guidance for programs and policy. However, to provide early feedback to state and county staff, we make the following suggestions: # Consider spending additional time and resources to promote greater use of transitional benefits for those exiting TANF for work, as well as greater participation in the Food Stamp Program for all TANF leavers. As discussed earlier, a large number of clients have left welfare for work but are not using all the supports available to them. Why not? Some report not knowing about transitional benefits. Others may be aware of these benefits but think (incorrectly) that they do not qualify for them. To improve client awareness of transitional benefits, program staff may want to inform clients about these benefits at regular intervals as clients enter various work-related activities. Staff also may want to inform clients about these benefits soon after they exit TANF (when clients first need these benefits and will, therefore, be more likely to focus on their importance). In addition, program staff can create simple budget tables showing the amount of Transitional Child Care benefits for which clients are eligible. They also can make sure that use of transitional benefits is an important focus of any postemployment programs offered. To the extent that the eligibility and paperwork processes may be complicated for those who have exited TANF to report their employment to the welfare office, it will be important to try to simplify these processes. Some clients may know about the transitional benefits but not use them. They may feel that the procedure for applying for and using these benefits is too complicated, or they may have other reasons for not using them. It is necessary to understand why many people are not using these supports. In our next round of surveys, we will focus on determining how many clients who are not using these benefits are eligible for them and why these clients are not using these benefits. # Consider providing additional postemployment services to clients who have found jobs. Many WFNJ clients find low-paying, entry-level jobs. The low wages that these jobs pay, combined with the high cost of work, can make it difficult for welfare recipients to maintain employment. In addition, welfare recipients who find work must adjust to the demands of the workplace and make reliable child care and transportation arrangements. Some must also deal with health and housing problems and contend with lack of support from family members. These concerns can all compound to make the transition from welfare xxi

18 to work difficult. Stronger postemployment supports (such as case management for high-risk clients and financial incentives for low earners) may help clients cope with these issues. Moreover, because many clients have little prior experience dealing with workplace issues, programs designed to help support newly employed welfare recipients may also need to place greater emphasis on dealing with workplace stress and getting along with others on the job. # Consider conducting comprehensive assessments for long-term TANF recipients to understand their needs and identify the best package of services. Clients who remained on TANF and were not employed at the time of the first survey were more disadvantaged than other clients. These clients face a variety of potential barriers to employment (such as low skills, poor health, and child care issues). Given the variety of challenges facing WFNJ clients who have not yet found jobs, program staff may need to focus additional resources on assessing their needs. Some clients who lack job skills may require additional training or more intensive job search assistance. Those with serious health problems may be better served by the SSI program. Those with less serious health conditions may be able do some kinds of work but may require additional support to maintain employment, such as specialized case management services designed to address their health care needs. Individualized and holistic assessments may best enable WFNJ staff to help clients who face TANF work requirements and have not yet found employment. Health problems emerged as an important issue for this group. Therefore, in the next round of the client survey and in the next Client Study report, we will focus on the nature and severity of the health problems of WFNJ clients and their family members and on how these health problems affect their ability to obtain and maintain employment. # Consider trying to reach all clients who exit TANF and determine why they are leaving and whether they have the necessary supports. Provide clients leaving TANF with information on other supports available in the community. Some clients who leave welfare and are not employed are living with other employed adults or have recent employment experience. However, many do not have such supports and may experience severe hardships, including living in extreme poverty. To provide the necessary post- TANF support services to these clients, it is important that welfare staff understand why these clients are exiting TANF and how they plan to support themselves. Welfare staff can gather this information as part of exit interviews if clients inform staff that they are leaving TANF. Based on this information, staff can inform clients of post-tanf support services (such as food stamps, Transitional Child Care, and Medicaid benefits) available to them through the welfare office, as well as other support services available in the community. Some clients may leave TANF without informing welfare staff. Staff may need to make a special effort to reach these clients to determine why they left TANF and whether they are receiving the support services they need. Welfare staff also may want to learn more about local support services available outside the welfare system and provide clients leaving welfare with information on these other supports. In the next round of client surveys, we will focus on understanding why former WFNJ clients who are not working left welfare. We also xxii

19 will gather additional information on the financial help and other support they may be receiving from friends, family, or community agencies. NEXT STEPS IN THE WFNJ CLIENT STUDY This report provides an early descriptive look at how current and former WFNJ clients and their families are faring under the new welfare policies and provides a benchmark by which to judge WFNJ clients economic progress. Subsequent reports will provide more detailed analyses of the welfare dynamics of WFNJ clients, their rates of employment retention, and the factors associated with a successful transition from welfare to work. The next round of surveys with our sample of WFNJ clients is scheduled to begin in December In addition to clients earnings, income, and household composition, this round of the survey will focus on three special topics: (1) why many clients do not use transitional benefits, (2) the nature and severity of health problems among certain WFNJ clients, and (3) why 4 those off TANF and not working left welfare and how they are supporting themselves. During early 00, we will conduct in-depth, in-person interviews with about 60 clients, which also will focus on these three special topics. These semistructured interviews will allow us to gain a more detailed qualitative understanding of clients lives, their experiences with the program, and the challenges they face as they make the transition off welfare. The findings from the next survey and insights from the in-depth interviews will be presented in the second Client Study report, scheduled for summer Topics for future surveys and reports will include substance abuse and mental health issues, food security, and child care and child well-being. xxiii

20 I INTRODUCTION ew Jersey s welfare system changed dramatically following the passage by Congress of Nthe Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of As part of its new welfare initiative, Work First New Jersey (WFNJ), the state has implemented the new federal work requirements and time limits imposed under PRWORA. It also has expanded child care assistance and other services designed to ease welfare recipients transition to the workforce. During the first two years under these reforms and in the context of a strong economy, New Jersey has experienced an unprecedented reduction in its welfare caseload. The size of the caseload has declined by almost 40 percent from July 1997 (the time the state fully implemented WFNJ) through August The dramatic changes in welfare policy and the sharp decline in the caseload have led to a great deal of interest in how families receiving cash assistance in New Jersey are faring and what has happened to those who have left cash assistance. In response to this interest, and to help the state and counties improve program operations, the New Jersey Department of Human Services (NJDHS) has contracted with Mathematica Policy Research, Inc. (MPR) and its subcontractors, the Roper Group and Mathtech, Inc., to conduct a comprehensive five-year evaluation designed to provide frequent feedback to state policymakers and program operators. The evaluation has three major components: (1) a longitudinal Client Study to track the progress of WFNJ families over a five-year period, (2) a Program Study to examine implementation issues, and (3) a Community Study to learn how WFNJ is unfolding at the community level. The text box on page 2 provides more detail on these three components of the evaluation. A. OVERVIEW OF THE REPORT This report is the first in a series of six Client Study reports tracking how current and former WFNJ clients are faring over time under the new reforms. In particular, the report addresses the following broad research questions: # What are WFNJ clients welfare and employment experiences during the first one to two years after they enter the program? # What is the life quality of clients and their families, as measured by their incomes, health status, housing arrangements, and other key outcomes? # How well do clients understand basic WFNJ provisions, such as time limits and work requirements? # What are clients challenges to obtaining and sustaining employment? Each of the next four chapters of the report focuses on one of these main questions. 1

21 MATHEMATICA S EVALUATION: THREE INTERRELATED STUDIES # The Client Study is tracking a statewide sample of WFNJ families over a fiveyear period to establish what happens to them before and after they leave welfare. Focusing on clients who participated in WFNJ during its first 18 months of operation, this study is documenting the welfare receipt, employment levels, income, health, housing arrangements, and other indicators of WFNJ clients general well-being and quality of life. It also will identify factors affecting individuals success in moving from welfare to work and document changes in the welfare caseload over time. The study uses three main types of data: (1) six rounds of longitudinal surveys with a statewide sample of up to 2,000 WFNJ clients, conducted at 9- to 12-month intervals; (2) information from state administrative data systems on a larger sample of,000 WFNJ clients, documenting such outcomes as their welfare receipt, employment levels, and earnings; and (3) three rounds of in-depth, in-person interviews with a subset of 60 WFNJ clients, designed to gather more detailed, qualitative information about their lives. # The Program Study is examining operational challenges and promising strategies for overcoming them, to help state and county staff identify and address key implementation issues. It also will help the state develop performance indicators to guide program improvement efforts. The analysis will draw on state administrative data and three rounds of site visits to 11 of the state s 21 counties. Site visitors will interview a variety of county staff members, conduct case file reviews, and observe key program activities. # The Community Study is conducting case studies in three urban areas--newark, Camden, and the population centers of Cumberland County--to understand how WFNJ is affecting the broader community and unfolding at the local level. The case studies will focus on the extent to which public and private institutions are collaborating to address low-income parents employment barriers and employers labor force needs. The study s primary goal is to identify promising strategies to enable local institutions to better respond to welfare reform and the needs of lowincome families. The analysis will draw on a survey of low-income residents, an employer survey, state administrative data, and interviews with local service providers and other stakeholders. Based on our analysis, we find that WFNJ clients are steadily exiting welfare. Approximately 21 months after entering the program, only 38 percent of clients were still receiving cash assistance. Among those who had left welfare, a little over half were employed. Clients who had left welfare for work had made a good start; they had higher incomes and were less likely to be in poverty than those staying on welfare. However, many of them were not using available post-tanf supports, such as Transitional Child Care benefits and food stamps. More than 4 in clients who left welfare were not employed. Some of these individuals had other sources of financial support (such as earnings from a spouse, partner, or other adult); others did not and were at high risk of poverty. Clients who remain on welfare face a variety of challenges to finding and maintaining jobs, with their own health problems and the health problems of other family members being a key barrier. 2

22 Finally, most clients were aware of the basic WFNJ provisions, such as time limits and work requirements, but were less clear on the specifics of the provisions. B. WELFARE REFORM IN NEW JERSEY In August 1996, Congress abolished the AFDC program (established in 1935 to support needy children without fathers) and replaced it with TANF, which imposes a five-year lifetime limit on cash assistance and requires most clients to work after two years of benefit receipt. Under TANF, states have greater discretion in establishing program policies than they did under AFDC. In addition, they are allowed to impose stricter time limits and work requirements than those specified in the federal legislation. In April 1997, New Jersey began implementing the federal reforms as part of its WFNJ initiative. The new policies were fully implemented statewide by July Under WFNJ, New Jersey has maintained some basic features of its former AFDC program. For example, the state has maintained its pre-tanf cash benefit levels, under which a family of 1 three with no other income receives $424 per month (Table I.1). In addition, as part of its earlier welfare reform initiative, the Family Development Program (FDP), the state had introduced (1) a family cap provision, which prevented clients from receiving additional cash benefits for children born while the clients were on welfare; and (2) expanded transitional Medicaid benefits, which allowed clients who left welfare for work to retain Medicaid eligibility for up to two years. WFNJ maintains these two key features of FDP. TABLE I.1 MAXIMUM TANF AND FOOD STAMP BENEFITS, BY FAMILY SIZE Family Size Maximum AFDC/TANF Grant (in Dollars) Food Stamp Benefits a (in Dollars) Combined Benefits (in Dollars) Federal Poverty Levels b (in Dollars) Combined Benefits as a Percent of Poverty Level , , , ,128 1, SOURCE: Adapted from the Committee on Ways and Means, U.S. House of Representatives a Food stamp benefits are based on maximum AFDC/TANF benefits shown and assume monthly deductions of $384 ($134 standard household deduction and $250 maximum allowable deduction for excess shelter cost). b Federal poverty levels are for 1998 and are divided by 12 to obtain monthly levels. 1 If this family also receives food stamps, its combined TANF and food stamp benefits would be $733. Income from these two sources would put the family at 64 percent of the federal poverty level (Table I.1). 3

23 Under WFNJ, the state also has introduced some substantial changes to its welfare program. Important new policies under WFNJ include: # Work Requirements for TANF Recipients. WFNJ emphasizes work and imposes an immediate work requirement, rather than the two-year minimum time limit that the federal law dictates. All WFNJ applicants must register for work with the state employment service and participate in a four-week job search class. Those who do not find jobs must participate in training, basic education, or work experience activities. Recipients who refuse to cooperate with these requirements are subject to grant reductions and, after extended noncompliance, case closure. # Time Limits on TANF Benefits. In accordance with federal requirements, New Jersey has imposed a five-year time limit on TANF benefits. However, certain WFNJ cases (such as the elderly, disabled, and victims of domestic violence) are exempt. Under some circumstances, other hardship cases may receive extended cash benefits for up to 12 months beyond the five-year limit. # Expanded Child Care Benefits. Under WFNJ, clients who exit TANF for employment can receive Transitional Child Care subsidies for up to two years after they leave cash assistance. C. THE SAMPLE FOR THIS REPORT This report examines the experiences of WFNJ clients who entered the program during the first year of its implementation, July 1997 to June This early cohort of WFNJ clients consists of two key subgroups: 1. The July 1997 Caseload. This subgroup represents those who entered WFNJ from the ongoing AFDC caseload when WFNJ was fully implemented in July It consists of those who were receiving AFDC as case heads in June 1997 and continued to receive cash assistance (now called TANF ) as case heads in July This subgroup represents 72 percent of clients who participated in WFNJ during its first year. 2. New WFNJ Entrants. This subgroup represents those who were not part of the AFDC caseload when WFNJ was implemented but entered the program sometime during its first year. It consists of those who were not receiving AFDC as case heads in June 1997 but who became TANF case heads at some point from July 1997 to June This subgroup represents 28 percent of clients who participated in WFNJ during its first year. To ensure adequate sample sizes for key subgroup analyses, WFNJ clients from the new entrant group, as well as those from rural counties, were oversampled. However, all analyses presented in this report are weighted, so that the figures represent the full statewide population of WFNJ clients who entered the program during its first year. 4